Trump’s tariffs: a bad idea made worse, 100 years later
Donald Trump’s plan to impose tariffs on Mexican exports unless our neighbor does something — he hasn’t specified what — to stop the flow of asylum-seekers is almost surely illegal: U.S. trade law gives presidents discretion to impose tariffs for a number of reasons, but curbing immigration isn’t one of them.
It’s also a clear violation of U.S. international agreements. And it will reduce the living standards of most Americans, destroy many jobs in U.S. manufacturing and hurt farmers.
But let’s put all of that to one side and talk about the really bad stuff.
Trump says that “TARIFF is a beautiful word indeed,” but the actual history of U.S. tariffs isn’t pretty — and not just because tariffs, whatever the tweeter in chief says, are in practice taxes on Americans, not foreigners. In fact, it’s now a good bet that Trump’s tariffs will more than wipe out whatever breaks middle-class Americans got from the 2017 tax cut.
The more important fact is that until the 1930s, tariff policy was a cesspool of corruption and special-interest politics. One of the main purposes of the 1934 Reciprocal Trade Agreements Act, which eventually became the template for the modern world trading system, was to drain that particular swamp by removing the capriciousness of previous tariff policy.
Trump’s erratic trade actions, unconstrained by what we used to think were the legal rules, have brought the capriciousness back, and good old-fashioned corruption — if it isn’t happening already — won’t be far behind.
Beyond that, tariff policy is inextricably linked with America’s role as a global superpower. Central to that role is the expectation that the U.S. will be both reliable and responsible — that it will honor whatever agreements it makes, and more broadly that it will make policy with an eye to the effects of its actions on the rest of the world.
Trump is throwing all that away.
By deploying tariffs as a bludgeon against whatever he doesn’t like, Trump is returning America to the kind of irresponsibility it displayed after World War I — irresponsibility that, while obviously not the sole or even the main cause of the Great Depression, the rise of fascism and the eventual coming of World War II, helped create the environment for these disasters.
It is, I believe, pretty widely known that America turned its back on the world after World War I: refusing to join the League of Nations, slamming the doors shut on most immigration.
What’s less known, I suspect, is that America also took a sharply protectionist turn and more than doubled average tariffs on dutiable imports. Like Trump, the advocates of these tariffs claimed that they would bring prosperity to all Americans.
They didn’t. There was indeed a manufacturing boom, driven not by tariffs but by new products like affordable cars and new technologies like the assembly line. Farmers, however, spent the 1920s suffering from low prices for their products and high prices for farm equipment, leading to a surge in foreclosures.
So am I saying that Trump is repeating the policy errors America made a century ago? No. This time it’s much worse.
After all, while Warren Harding wasn’t a very good president, he didn’t routinely abrogate international agreements in a fit of pique. While America in the 1920s failed to help build international institutions, it didn’t do a Trump and actively try to undermine them.